By Selena Li and Samuel Shen
HONG KONG (Reuters) - UBS has halted plans to set up a new fund unit in China and decided to maintain ownership in a mega fund joint venture from its Credit Suisse takeover, two people with direct knowledge of the matter said.
UBS has decided to indefinitely suspend works in preparation to set up a wholly-owned mutual fund business in China, the people said, pausing plans it formed as early as 2021 when the bank was keen to expand in China's fast-growing $3.9 trillion fund market.
Suspending its original plan was mainly due to China's regulation that stipulates any company can own no more than two fund management firms in the market, the people said.
UBS already owns 49% of fund firm UBS SDIC Fund Management in China, while its emergency takeover of rival Credit Suisse in mid-June left the bank with a 20% stake in ICBC Credit Suisse Asset Management - a joint venture with the world's largest lender Industrial and Commercial Bank of China (ICBC).
UBS recently decided to keep the ownership and remain in partnership with ICBC, the two people said, asking not to be identified due to the sensitivity of the matter.
Credit Suisse, UBS and ICBC Credit Suisse declined to comment.
The Swiss banking behemoth factored in lucrative income that the joint venture brings in, according to one of the people and a third source with knowledge of the matter.
Beijing-headquartered ICBC Credit Suisse, which had 1.72 trillion yuan ($238.96 billion) in assets under management as of end-2022, booked close to 2.7 billion yuan in net profit last year, according to an ICBC disclosure.
It may take more than one year for UBS to give a final verdict on the fate of the newly planned fund unit, leaving the staff of close to 60 people facing great uncertainty, one of the first two people said.
UBS's decision to keep two joint ventures in China was first reported on Monday by Ignites Asia.
($1 = 7.1979 Chinese yuan)